Philadelphia Deficiency Judgment Lawyer
What Is a Deficiency Judgment?
For many Philadelphia homeowners facing foreclosure, the process doesn’t always end when the home is sold. In some cases, lenders pursue a “deficiency judgment,” which is a court order that allows the lender to collect additional money from the borrower after the foreclosure sale. At Louis S. Schwartz, Attorneys at Law (ConsumerLawPA), we help homeowners understand when a deficiency judgment may be pursued, how to fight it, and what legal options exist to protect themselves.
If you’ve lost your home to foreclosure or your property was sold at sheriff’s sale, it’s important to know your rights and responsibilities regarding any remaining balance owed.
The basics of a deficiency judgment
A deficiency judgment occurs when the sale of a foreclosed property does not fully satisfy the total amount owed on the mortgage. For example, if you owed $200,000 on your loan but the property sold for only $150,000 at a sheriff’s sale, the remaining $50,000 is the deficiency. In some cases, the lender can sue you in court to recover this balance.
Not all foreclosures result in a deficiency judgment, and the ability of a lender to collect depends on several factors, including the type of loan, how the foreclosure was handled, and whether the lender followed state-specific procedures.
In Pennsylvania, lenders can pursue a deficiency judgment after the sheriff’s sale—but they must act quickly. They have only six months from the date the sheriff’s deed is delivered to file a petition with the court requesting a deficiency judgment.
How deficiency judgments work in Pennsylvania
Pennsylvania law requires lenders to follow specific steps before they can obtain a deficiency judgment. After the sheriff’s sale, the lender must petition the court under the Deficiency Judgment Act. This petition must state the fair market value of the property and explain the difference between that value and the amount still owed on the mortgage.
The court does not automatically approve the lender’s valuation. The borrower has the right to challenge the claimed deficiency by arguing that the fair market value of the property was higher than what it sold for at auction. If successful, this can reduce or eliminate the amount the lender is allowed to collect.
At ConsumerLawPA, we represent homeowners in post-sale proceedings, including deficiency judgment disputes. We carefully examine the sheriff’s sale process, property valuations, and the lender’s calculations to determine whether a fair and lawful result has been reached.
Potential consequences of a deficiency judgment
If a deficiency judgment is granted, the lender may pursue collection in the same way as other judgments. This can include:
- Garnishing wages
- Placing liens on other property
- Freezing or levying bank accounts
- Reporting the debt to credit bureaus
This added financial burden can make it even more difficult to recover after losing a home. It can also significantly damage your credit score and make it harder to obtain future financing or rental housing.
However, not all borrowers are subject to deficiency judgments. Some mortgages, especially those backed by certain government programs or modified through settlement agreements, may waive the lender’s right to seek a deficiency. In other situations, bankruptcy may eliminate or reduce the ability of the lender to collect the remaining debt.
How to avoid or challenge a deficiency judgment
There are several ways to avoid a deficiency judgment or reduce its impact. These include:
- Negotiating with your lender before the foreclosure sale: In some cases, you may be able to work out a waiver of deficiency as part of a short sale or deed in lieu of foreclosure.
- Challenging the property’s fair market value in court: If your home was sold for less than it was worth, you may be able to prove that the deficiency is exaggerated or unjustified.
- Filing for bankruptcy protection: In a Chapter 7 or Chapter 13 bankruptcy, a deficiency judgment may be discharged or repaid under court-supervised terms.
- Responding quickly to court filings: If a lender petitions for a deficiency judgment, you must act within the time limits to challenge the petition and assert your defenses.
At Louis S. Schwartz, we take a strategic approach to protecting homeowners from post-foreclosure liability. We understand how to challenge inflated deficiency claims and negotiate with lenders to achieve favorable outcomes.
You are not powerless after foreclosure
Just because your home has been sold does not mean you have no legal options left. Many homeowners believe the worst is over after a sheriff’s sale, only to be surprised by a new court filing demanding additional money. The good news is that Pennsylvania law provides you with rights and defenses—but only if you act quickly.
If you’ve received notice of a deficiency judgment filing or are concerned one may be coming, now is the time to seek legal advice. The earlier we can review your case, the more opportunities we have to protect your finances and prevent further harm.
Talk to a foreclosure attorney about deficiency judgments
At ConsumerLawPA, we help Philadelphia homeowners navigate every stage of foreclosure—including the aftermath. Louis S. Schwartz, Attorneys at Law, has extensive experience handling deficiency judgment cases and advocating for consumers facing unfair demands.
If you are concerned about being held responsible for unpaid mortgage debt after foreclosure, contact us today for a confidential consultation. We will review your case, explain your rights, and help you build a plan for protecting your financial future.
